BioCrossroads drops dreams for hospital innovation

August 15, 2013
Back to TopCommentsE-mailPrintBookmark and Share

Sorry, IU Health.

There’s almost no chance of you becoming the next Cleveland Clinic, according to a report released last week by BioCrossroads, the Indianapolis-based life sciences business development group.
 
That’s because of the new demands for cost-cutting in health care, which are coming from Congress’ budget battles, the influx of baby boomers into the Medicare program and now Obamacare.
 
There simply isn’t the money available anymore for a hospital to replicate the 65-person staff and dedicated investment funding that Cleveland Clinic uses to turn medical innovations into high-growth companies.
 
This is not what IU Health or BioCrossroads wanted to hear. The leaders of both organizations had thought that IU Health individually or Indianapolis-area hospitals collectively could become engines of innovation to produce new life sciences companies.
 
BioCrossroads CEO David Johnson first mentioned the idea to me in early 2008, when I wrote a story about a researcher at Franciscan St. Francis Health who had stumbled on a way to diagnosis and potentially reverse autoimmune diseases.
 
That research did turn into a company, Redox Reactive Reagents LLC, which is trying to commercialize the technology as a diagnosis for Alzheimer’s disease. But Franciscan decided it wasn’t going to be in the startup game. It sold its stake in the company to the other owners and walked away.
 
About a year earlier, IU Health CEO Dan Evans had tapped his longtime friend Matt Neff to launch a venture capital arm, CHV Capital Inc., funded by some of IU Health's large endowment.
 
The firm has backed several Indiana life sciences companies, including Endocyte Inc., Nico Corp. and Perfinity Biosciences Inc. But it’s one attempt to commercialize research from within the IU Health system—a 2008 investment in CS-Keys Inc.—went nowhere.
 
The BioCrossroads report concludes that “classic innovation models such as the one resident at the Cleveland Clinic are too capital intensive to replicate.”
 
But BioCrossroads still sees opportunities for local hospital systems to play a major role in health care innovation, not so much by launching companies themselves, but rather by helping entrepreneurs understand the challenges that need to be fixed and then helping them test, refine and scale up their proposed solutions.
 
The Infuse Accelerator for digital health startups, which is being launched in Indianapolis, is trying to do exactly that. And so is the Hoosier Healthcare Innovation Challenge, an annual event where health care organizations present problems they have to IT entrepreneurs, who try to invent a solution.
 
A good example is Indianapolis-based Diagnotes Inc. It won the 2012 Healthcare Innovation Challenge and then worked with Community Health Network to pilot its mobile app, which allows doctors and patients to swap key medical records and images over mobile phones—yet without violating federal medical privacy laws.
 
Community has now signed a contract to use Diagnotes among some of its physicians.
 
BioCrossroads also thinks Indianapolis’ hospitals can replicate the kind of collaboration that led to the 2004 launch of the Indiana Health Information Exchange Inc., which allows hospitals to swap electronic patient records as needed from one health system to another.
 
Indianapolis’ hospitals could collective pitch themselves to drug and device companies to attract more of the clinical trials those companies fund, the BioCrossroads report suggested.
 
The hospitals could also consider forming a joint clinic that would conduct research, clinical trials and education, such as the Orthopedic Capital Clinic being launched by OrthoWorx, a BioCrossroads offshoot, in Warsaw, Ind.
 
None of those would have the impact of a Cleveland Clinic. But, as I’ve written elsewhere, in this age of austerity, the nature of health care innovation is going to be different than before.

ADVERTISEMENT
  • Purdue
    Purdue is Indiana's engine of Health Care and Life Science, not IU Health. Pharmaceuticals, Animal Science, Life Science from Purdue, not IU's Medical School.
  • Outlook for healthcare innovation in Central Indiana: Better than its local perception
    Thanks for the interesting commentary on the recent BioCrossroads report “Healthcare Driven Innovation: An assessment of opportunities in Central Indiana.” Instead of bidding adieu to “dreams for hospital innovation,” the report simply confirmed what many health systems already know: It is hard to emulate the Cleveland Clinic, whether that is with regard to clinical processes, outcomes, and quality of care, or its innovation model. What the report said loud and clear between the lines, however, is worthwhile repeating: Healthcare in the US needs innovation to chart its way out of the mess it is in. And that is why I moved to the Indiana University School of Medicine/the Regenstrief Institute from the University of Pittsburgh and its juggernaut medical center. I am a biomedical informatician, since my earliest uses of a computer always focused on solving practical problems. Whether it was writing software to calculate the value of standing timber for my father (a forest superintendent) or programming algorithms for materials testing in a manufacturing company, improving real-world outcomes was always front and center for me. Now, I work for an Institute that has the same priority. The report astutely examines current local healthcare innovation efforts and outlines a path forward. Many aspects of this path are unknown, but its general shape is clear: Innovating successfully in healthcare requires a balanced amalgam of healthcare institutions (specifically hospitals), clinicians (not just physicians), and entrepreneurship embodied by companies large and small. In this triad, it is often the institutions who are their own worst enemies. While most want to be like Stanford, MIT, or, in this case, the Cleveland Clinic, academic and clinical institutions often create a dizzying array of disincentives and barriers to the innovations they intend to produce. At Temple University in 1989, my first job in the US, the research office was so dysfunctional that any thought of commercializing an innovation was ludicrous. When I started at the University of Pittsburgh in 2002, one of my senior colleagues in biomedical informatics said to me: “If you want to innovate and commercialize, go elsewhere.” Six or so unsuccessful innovation disclosures with Pitt’s Office of Technology Management later, I took his advice. So, I decided to go to one of the historically most innovative places in healthcare informatics, the Regenstrief Institute Center for Biomedical Informatics (CBMI), as its third director. It helped that even as dental student in Germany I was familiar with the work of its founder, Clem McDonald. (I now have the honor of holding a professorship endowed in Clem’s name.) In the aggregate, the BioCrossroads makes a few simple points. Healthcare innovation requires the involvement of physicians and other clinicians. Hospitals and other healthcare institutions need sensible strategies to support and nurture this innovation. We need the help of entrepreneurs and the business community to make these initiatives fly in the marketplace. We need to take advantage of local assets and resources. And, we need to collaborate. I am personally not upset at all that the report concluded we can’t recreate the Cleveland Clinic Innovations model here. Maybe we shouldn’t. According to the report, the Cleveland Clinic started building its vertically integrated innovation and commercialization model in 1921. So, I’d say they have a pretty good head start. The commentary derides IU Health for its poor track record of commercialization through CHV Capital Inc. Well, if it’s any consolation, UMPC didn’t do a whole lot better, despite huge investments. So, the dream of the high-flying, royalty-gushing conveyor belt of startups might not be for many, anyway. Taking a bright idea from its conception to successful commercialization is an extremely long and arduous road. Most startups in business in general fail. Thus it is in healthcare. As the report suggests, we may want to look at particular facets of the innovation value chain. Here are a few relevant comments: - Most healthcare institutions love solving a local problem, whether it is in administration, clinical care or operations. Solving this kind of problem usually saves money, improves outcomes or both. Helping hospitals and other healthcare providers do that has important benefits for the economy, health and quality of life. - Let’s create the right partnerships to help innovative ideas succeed. An innovative clinician needs partners on the business who understand the need, the solution and the potential market. I have seen a lot of good ideas go down the drain because the business people didn’t really understand what they were trying to market, who to market it to and why the innovation was needed in the first place. - Let’s stop trying to tie ourselves in knots with our own homemade rules. I have listened to endless arguments in academia on who exactly owns the IP, how the revenues should be split, who gets the right to license the technology, etc. Guess what? 80% of zero is still zero, so let’s cut to the chase and help new ideas take wing with the least amount of bureaucratic overhead. - Healthcare is an information-intensive business. This will get only worse. According to a report from the Institute of Medicine, the number of data points required for individual clinical decisions will continue grow exponentially (reflecting our growing insights into the genomic and proteomic basis of disease). How do you do this without a computer? You don’t. Informatics and information technology are not just crucial for innovating in healthcare. They are crucial just for delivering basic care. Given the strength of Central Indiana in applied clinical informatics, we have huge opportunities in that space. - But, to take advantage of these opportunities, we need to collaborate. The Indiana Network for Patient Care is a good example of what happens when you do that. It certainly is not the only health information exchange in the country, but it is the largest and most mature. In general, Central Indiana looks to me to be one of the more collaborative healthcare markets I have ever lived in. Certainly, the Philadelphia and Pittsburgh areas cannot be held up as paragons of collaboration in healthcare. - The INPC provides us with possibilities that simply don’t exist anywhere else. Let me give you an example. The other day I was talking to a CBMI staff member about how to transmit health data from personal monitoring devices, such as health apps for blood pressure, glucose measurements, pulse rates, etc. Eventually, the discussion turned to the benefits of feeding patient-generated data directly into the INPC. The value of doing that to clinicians? Priceless. - We need to stimulate the dialogue among parties who normally would not be talking to each other. One of my first experiences at CBMI was the Electronic Medical Record Summit, a conference which brought, with generous support by Merck, major and minor health information technology (HIT) companies together, including Epic, Cerner, Allscripts, iSalus and IHIE. For a day, we discussed HIT innovation in the context of Regenstrief’s cutting-edge technologies. - Let’s not forget that Central Indiana is not the only place producing innovation. Right before I left Pittsburgh, I sat down with faculty colleagues at Carnegie Mellon University. I left with a whole bag of innovative technologies that were ready to be tested and evaluated in practice. Exactly the thing we could do in Central Indiana. - The Report justifiably identifies clinical research as a significant opportunity for the region as a whole. The more attractive we collectively become as a location for major funders to conduct research, the more we can contribute to generating knowledge. And, we are very well positioned today, as the extremely positive review of our application for a Clinical and Translational Science Award from the NIH illustrated. At IU Health, we incentivize research by making part of the bonus for each hospital CEO dependent on the number of research participants recruited. We use tools such as ResNet (Research participant recruitment Network), to identify potential participants from electronic data. And, at Wishard, our G3 software suggests patients eligible for particular studies as physicians type their notes. So, what are the opportunities in Central Indiana? Stellar. Forget what the Cleveland Clinic does. Let’s do it the Hoosier way! Titus Schleyer, DMD, PhD, MBA Clem McDonald Professor of Biomedical Informatics Director, Center for Biomedical Informatics Regenstrief Institute, Inc., 410 West 10th Street, Suite 2000, Indianapolis, IN 46202-3012 Skype: titus.schleyer, Ph: (317) 423-5522 (direct), cell: (412) 638-3581, E-mail: schleyer@regenstrief.org Web: http://www.regenstrief.org/cbmi/, Blog: http://titusschleyer.wordpress.com, General: http://about.me/titusschleyer
    • Your current blog entry
      JK, I read your blog this morning. J.K.: Your word choice about the researcher at Franciscan St. Francis Health who had "stumbled" on a way to diagnosis and potentially reverse autoimmune diseases seems rather dismissive. The late Dr. John McIntyre, former director of the HLA-Vascular Biology Laboratory at St. Francis, labored long and vigorously to develop Redox-Reactive Reagents (3R), whose aim is to revolutionize the diagnosis and treatment of autoimmune diseases. Dr. McIntyre was internationally recognized as an immunology research expert. No doubt his work in this field today yields great benefits for patients suffering from Alzheimer’s disease, cancer and diabetes. In fact, the Indianapolis Business Journal recognized him as a Health Care Hero finalist in 2001 and 2009 in the “Advancement in Health Care” category. Given the body of Dr. McIntyre’s contributions – and IBJ’s own recognition of his research – it is wrong to conclude he merely stumbled onto his scientific discoveries. His work was groundbreaking. Joe Stuteville Franciscan St. Francis Health
    • Expectations
      We might only hope hospitals would think Job#1 would be correct diagnoses and treatment, in a caring and fiscally responsible environment, of patients presented to them would be a mission unto itself. This kind of focus, although not the cash cow envisioned, would probably advance public health in multiples of the rainbow many are seeking.
    • thanks
      Thank you for taking the time to make this post, Dr. Schleyer. Very useful.
    • Stating the obvious
      Why did it take a report by BioCrossroads to state the obvious? Let me state the obvious: 1. The hospital model for innovation does not work. 2. The local hospital systems are worrying about survival because of the rules for reimbursement. Keeping their doors open is job one. 3. Most physicians are hospital employees. They get no incentive to conduct research, participate in clinical trials, or innovate. IU, the only academic institution mentioned in the report. However, you have heard my critique of this as a comment to this columnist's interview of Dr. Brater recently. In short, IU has failed our community to be a major league academic institution and has failed in training enough physicians for our State. Health care in our State has deteriorated in our State over the last 10 years. 4. The local hospital systems have typically never cooperated. What would be the incentive for them to collaborate on research or clinical trials? 5. Our local medical community has no clue to the current clinical trial environment (site requirements, recruitment issues, etc.) and all of its complexities. We are city of clinical trial dabblers and not dedicated research sites (except for my site). 6. It was sad and waste of time and money by BioCrossroads to put together such a superficial report. 7. Our State continues to squander its public money on biomedical programs that are doomed to failure. 8. There is more to Cleveland Clinic story, the research arm, that was not addressed. Cleveland Clinic and others like it have developed strong relationships with the pharmaceutical and medical device industries. Obviously, IU gets an "F" in that category. 9. The report should have concluded by suggesting that current organizations that are providing information, and recommendations for the biotechnology industries for our State should be totally scrapped and replaced with programs that have a chance of success. 10. There should be more of a scientific public debate about these issues. Oh, I forgot, we are only a "one horse town." Phillip D. Toth, MD, FACP Midwest Institute For Clinical Research
    • Stating The Obvious
      Why did it take a report by BioCrossroads to state the obvious? Let me state the obvious: 1. The hospital model for innovation does not work. 2. The local hospital systems are worrying about survival because of the rules for reimbursement. Keeping their doors open is job one. 3. Most physicians are hospital employees. They get no incentive to conduct research, participate in clinical trials, or innovate. IU, the only academic institution mentioned in the report. However, you have heard my critique of this as a comment to this columnist's interview of Dr. Brater recently. In short, IU has failed our community to be a major league academic institution and has failed in training enough physicians for our State. Health care in our State has deteriorated in our State over the last 10 years. 4. The local hospital systems have typically never cooperated. What would be the incentive for them to collaborate on research or clinical trials? 5. Our local medical community has no clue to the current clinical trial environment (site requirements, recruitment issues, etc.) and all of its complexities. We are city of clinical trial dabblers and not dedicated research sites (except for my site). 6. It was sad and waste of time and money by BioCrossroads to put together such a superficial report. 7. Our State continues to squander its public money on biomedical programs that are doomed to failure. 8. There is more to Cleveland Clinic story, the research arm, that was not addressed. Cleveland Clinic and others like it have developed strong relationships with the pharmaceutical and medical device industries. Obviously, IU gets an "F" in that category. 9. The report should have concluded by suggesting that current organizations that are providing information, and recommendations for the biotechnology industries for our State should be totally scrapped and replaced with programs that have a chance of success. 10. There should be more of a scientific public debate about these issues. Oh, I forgot, we are only a "one horse town." Phillip D. Toth, MD, FACP, Midwest Institute For Clinical Research

    Post a comment to this blog

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT
    1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

    2. $3B would hurt Lilly's bottom line if there were no insurance or Indemnity Agreement, but there is no way that large an award will be upheld on appeal. What's surprising is that the trial judge refused to reduce it. She must have thought there was evidence of a flagrant, unconscionable coverup and wanted to send a message.

    3. As a self-employed individual, I always saw outrageous price increases every year in a health insurance plan with preexisting condition costs -- something most employed groups never had to worry about. With spouse, I saw ALL Indiana "free market answer" plans' premiums raise 25%-45% each year.

    4. It's not who you chose to build it's how they build it. Architects and engineers decide how and what to use to build. builders just do the work. Architects & engineers still think the tarp over the escalators out at airport will hold for third time when it snows, ice storms.

    5. http://www.abcactionnews.com/news/duke-energy-customers-angry-about-money-for-nothing

    ADVERTISEMENT